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In a New Court Filing Expedia Makes Third Effort to Change Jurisdiction
in Hotel Tax Lawsuit Against the City of Columbus, Georgia to Federal
Court, Seeking a Potential Game-Changer in this Legal Battle

By Jim Mustian, Columbus Ledger-Enquirer, Ga.McClatchy-Tribune Regional News

Aug. 05, 2011--Online travel company Expedia, seeking a potential game-changer in a legal battle with Columbus over hotel taxes, has removed the city's long-running lawsuit to federal court for the third time in more than five years of litigation.

The filing comes about two weeks after attorneys for both sides swapped information about their expected attorneys' fees and costs. While acknowledging that a third effort to change jurisdiction is unusual, Expedia's attorney argued in new court filings that the city recently broadened the scope of its lawsuit, seeking damages and attorneys' fees that will exceed the $75,000 threshold for federal jurisdiction.

Attorneys for the city have not disclosed their expenses; the amount was redacted from Expedia's federal filings, and a related document enumerating the fees was filed under seal. As it has on two previous occasions, Columbus opposes trying the case in federal court. It avoided previous efforts by asserting the total amount of damages and penalties it sought did not exceed $75,000. Expedia claims the city can no longer make that argument in light of its amended lawsuit.

"In effect, Columbus has filed an entirely new lawsuit against Expedia based on heretofore unasserted claims and now seeks an unlimited amount of damages and attorneys' fees," Expedia claimed in federal court documents.

The city intends today to file a motion to remand the lawsuit back to Muscogee County Superior Court, where the case has been pending before Judge Doug Pullen.

"This latest filing by Expedia and Hotels is the latest attempt to delay the case and put off ‘Judgment Day' for them," said Wally Walker, a Columbus attorney who represents the city. "We believe the filing is frivolous."

The removal marked the latest attempt by Expedia to remove the lawsuit from Pullen's jurisdiction. The company claims it has suffered from Pullen's "arbitrary and onerous directives and his transparent intent to grant an unwarranted attorneys' fees award" to Columbus. In another unusual development in the case, Expedia recently accused the judge of breaking the law by deliberately dragging his feet and failing to enter written orders in a timely fashion.

The litigation stems from a flurry of suits Columbus filed about five years ago against online travel companies, alleging it was being shortchanged on occupancy taxes. While the city has settled with -- and dismissed similar lawsuits against -- other online travel companies, the back-and-forth with Expedia and has been prolonged by bitter legal wrangling.

Attorneys for Columbus, pointing to internal memos, have argued in court filings that Expedia's posture reflects a strategy to litigate indefinitely as part of alleged effort to avoid paying occupancy taxes, and ostensibly dissuade other municipalities from pursuing similar cases.

Last year, Expedia paid the city more than $55,000 to satisfy claims for back taxes and interest, without admitting to the city's allegations. But the city last month filed an amended lawsuit against the company, arguing that, because Expedia has not acknowledged its payment amounted to owed occupancy taxes due under the law, the taxes and interest are still owed.

Pullen issued a permanent injunction against Expedia in 2008, ruling the company must collect taxes based on the amount it charges customers for hotel rooms instead of the rate negotiated with hotels. The company has removed the city from its website and stopped doing business in Muscogee County.

In a comparable case in Atlanta, the Georgia Supreme Court recently ruled that cities have no remedy for back taxes against online travel companies because they are not innkeepers or operators, but also that the companies must collect occupancy taxes based on the retail room rate instead of the wholesale rate negotiated with hotels.


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Copyright (c) 2011, Columbus Ledger-Enquirer, Ga.

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